So we finished out FOE by trying to push some of the key themes of the conference into a global context, with panelists Nancy Baym (Personal Connections in a Digital Age), Robert Ferrari (Vice President of Business Development, Turbine Inc.) and Maurício Mota (Director of Strategy and Business Development, New Content Brazil).

The panel was moderated by C3 Reseacher Xiaochang Li (that would be me, for those of you playing at home) and Liveblogging was done by Harvard undergraduate Christina Xu.

Introduction of Panelists:

Nancy Baym: I study fans on the internet. I come at it from an interpersonal relationship and community building angle. I'm more interested in music fans than the narrative music, and how they relate to other fans in relation to pop culture material. I'm especially focused on Swedish/Scandinavian music flowing out of Swedish borders.

Bob Ferrari: VP of Business development, Turbine Inc. Looking at the online gaming side of the business. Turbine is a studio, 350+, based in Boston with a small office on the West Coast, that focuses on social (MMO) gaming. We build these deep dynamic worlds around brands (LoTR, D&D) and bring in hundreds of thousands of players into these live worlds and allow them to play & socialize. What I've been doing is driving it not just domestically, but also bringing them to other countries (Russia, starting South America, China/Hong Kong, Korea).

Mauricio Mota: Director of Strategy and Business Development, New Content. Pioneer company on branded content, leading the process of bringing transmedia storytelling to Brazil. Managing all of Unilever's 29 brands.

MM: This video is about content development in Brazil. We have a (smaller than US) movie industry in Brazil--2,400 movie theaters in Brazil, we need 6,000 for it to happen. When a movie happens there, the box office reaches 3 mil. This video is about a very controversial movie, Tropa de Elite (Elite Squad): it was controversial because it is about violence, think Traffic meets Gladiator in a big city like Rio. This is the first movie to try to bring the point of view from the police officers. It's fiction but it's based on the truth of what really happens in Brazil. The Elite Squad exists, they are very well-trained (they give courses to the FBI), but they also use "non-traditional" methods to deal with bad guys. It brought a deep discussion to the country about human rights and mobilized a lot of people.

<<What happens when Captain Nascimento meets Henry Jenkins>>

MM: The mashup (at the end of the video) was created by fans and has millions of views on YouTube. Hook, Shrek, Bin Laden, and Bush together on this show they created, "Nascimento Interrogates", and each one of those episodes had 4 mil views. The movie was leaked to the vendors before it was released, and then it was leaked onto the internet where fans translated it for 15 countries two months after its released. We have estimates that it has now been seen by 13 million people. But the official box office number was 5 million. Piracy, and spreading the content, ended up helping a lot.

XL: This is a great place to open the discussion. We're still privileging a little bit the broadcast content. In this panel, we're looking at audiences that are looking at content primarily online--even when they are looking at the original property, they are disregarding the original context. Do you see this as an added value or a potential threat?

NB: In the context of the music scene, I've been interviewing people who run independent labels. To a person they say that filesharing is the best thing that's ever happened. There are no "surplus audiences" in their view and they're totally idealistic about it: look at "The Swedish Model", which is a platform where they're trying to envision a new future for the music industry where spreadable media allows them to create a larger audience and they don't think about it in economic terms. The internet is their future and their audience. The guy who runs a label called "Songs I wish I had Written"--uploads every new release IMMEDIATELY to Pirate Bay so that they can guarantee the high quality torrents are being passed around.

BF: The traditional video game industry shudders when they hear piracy. What we've seen over the past few years are properties like ours where you have to be online. Our product is actually a service--you need to get the game client (which can be bought or even shared) and the service. So while I care about people paying the wholesale price, I actually care a lot more about getting more clients on the service because they're paying on a monthly basis. There's a global demand for our product, which is amazing. Sometimes Europeans or Asians want to play on the North American servers because they have friends here. So now it's a global opportunity but also a global threat.

MM: I could talk about the landscape theoretically, but it really saved the movie. We were having lunch 2 or 3 months before the movie, and there were rumors that the movie was going to get canceled by the government because it told people that the police were violent. So, putting the movie on the street may have saved the music. And it also opened up audiences that wouldn't have been exposed otherwise. For example, when I came here around the release time, Kevin (Driscoll) was already listening to the funk music from the movie. If a movie does well with audiences, it also does well on DVDs--the Blockbuster numbers for TdE were amazing.

XL: Have you seen a shift in the behavior of the industry now that these practices are more visible?

BF: In the gaming side, definitely. Years ago, it was a common model of purchase of client and playing online. But now, due to Asian influence, a lot of people want to play games for free. So with that, the online gaming industry has to really look at our models and figure out how to make future games free to play and let people not have to pay 15 bucks a month but maybe pay for accessories. The challenge is change in the content that's already been built. For example, LoTR--you can't just shift the business model after having poured so much money into it.

XL: Can you speak a little bit about why those models work in those places and maybe not here?

BF: Our industry has been here about 10 years now, and it started off as premium content organized kind of like a social club (membership). The Asian model was a lot difference because folks weren't staying in their homes playing games, they were going into internet cafes and social venues. So we're going to play with each other while sitting next to each other. Whereas here, it's like everyone is staying home and one person is in Boston and another person is in California.

XL: For Nancy and Mauricio, are you seeing shifts in your industry due to practices in other markets?

NB: One thing that's happening is that selling CDs is obsolete for everyone except the big 4 companies. So there are innovative alternative revenue schemes that sometimes implicate other media: licensing for films, licensing for advertising (stigma for "selling out" being reduced). Backtracking for a second: the mp3 blog allows fans to become tastemakers at a level that's different from anything before. SwedesPlease (Chicago) or Absolutnoise.blogspot.com (Paris) are both mp3 blogs that post exclusively Swedish music. These two sites have become acknowledged tastemakers in the music scene.

MM: There's a good example in the music industry in Brazil. There's a band called Calypso that makes DVDs and CDs of their content and gave them to the pirate vendors for free but capped the price the vendors could sell for. They now do 6 shows a day in Brazil, have the Guinness world record for shows, and major labels now want the records to sell at the same price as the pirate vendors. They have many shows in other countries that are more crowded than other Brazilian musicians.

XL: It's interesting that the blogs are in French as well as for English, so are these audiences diasporic...?

MM: Using Kevin as an example again, there is a large number of people looking for international content. The international audience is even bigger than the immigrant audience.

NB: There's not a huge number of diasporic Swedes and most of them are in Berlin. It's an interesting mix: the Swedish music is like Ikea for British and American pop: catchy and cute and makes you look hip, but it's also a little exotic (Peter Bjorn and John).

BF: Definitely not diasporic in the gaming industry. What is designed in North America FOR North America isn't going to work the same for Asia or South America (Europe is fine), so we have to look for local partners to figure out what variations we have to do to make our business work abroad. For example, here in North America our subscriber base is fine paying us with a credit card, but in India, most people don't have the disposable income or credit cards to do it. In China, people rent a seat in internet cafes, so they don't want a 30 day membership but want to pay by the hour that they're playing.

XL: Moving past the distribution methods and in towards the content itself, how do you find the balance in cultural translation between exotic and familiar?

MM: There are maybe 8 countries in the world that speak Portugese. The language is an enormous barrier. We have a small portion of the population who speaks English well enough to translate. So we have to go to the immigrant fanbase to help us translate the movie from Portugese to other languages. If the producers leaked the video with subtitles, it would be easier, but then it would be obvious that they leaked it on purpose.

BF: We're looking at the Brazilian market right now: great, loyal, (MM: addicted) gaming market. LoTR has been labeled as one of the most visually pleasing games out there, but it's heavy--the client is over 5 GBs in size. The PC owners in SA don't have the specs to run these types of games. So we have to look at our game and figure out how to make the client smaller so that we can get into broader distribution channels. Translation is hard for us: there are about 2 mil words in LoTR, so that process may take us about 3 months, but it's so important that we need to plan for that.

NB: If you released it in Brazil today would they have translated it by tomorrow?

BF: No, they have to have the code for us to do the translation, and then we have to integrate it back into the game.

XL: How are you deciding what kind of content moves from one place to another in the official distribution channels? Is it just what's done well in the domestic market, or are there other considerations?

BF: When we develop content here in our studio, our number one target is the North American audience. When you look at global projects, you need people to ask "how do we tweak this a little bit to fit the Asian markets?" So now, more and more, companies are looking at global markets and customizing their products for overseas markets instead of just shipping one-size-fits-all North American products abroad.

NB: It's a total fan thing: "I like this one and I want you to hear it too!". Itsatrap.com (from Olympia, WA), which is a dominant news site for the Scandinavian music industry (half of their hits come from Scandinavia) and people in the industry thinks he knows more than they do about the music. The industry is not thinking about global markets: they aren't sending CDs outside of the country, but they are totally into spreadable media. Labrador Media gives away every single they ever put out and stream their stuff, and that's how they deal with international marketing.

BC: Google/Blogger has taken down posts from major mp3 blogs. What do we lose if mp3blogs go the way of Napster?

NB: We're going to have a lot more independent music getting heard because the ones that are taken down are the ones by the major 4 companies, the independent labels won't care as much.

XL: Do you get the sense that legislature will eventually be able to keep up with the flow of this content?

MM: In Brazil, we are in the stone age. iTunes would have billions of dollars of profit in Brazil if they moved there, but there are 5 publishers for the same song and the legislation is a huge mess.

BF: We become affected by international governments in huge ways, specifically Korea. Korea limits (in the gaming business) the amount of non-Korean games in the market. Because of our games, we like to have a local serverbase and a community manager team in that country that translates for the community, and specific billing options, and so we have to have businesses based there. The governments can be hard to deal with. In China, the online games have become so addictive that the gov't is concerned about the well-being of their citizens. They demand games to have an anti-addictive feature built-in, which takes time and money to do.

XL: The two arms of discourse of globalization have been that 1) it's just westernization or 2) that it allows a lesser market to come into the game and decenter the US. What do you think is the importance of the US or Europe in this new global market?

NB: I think that Americans (more so than Europeans) are getting access to more and more stuff that we've never had access to before. Look at the anime movement, for example. But I think that the same media is also allowing American stuff to spread elsewhere.

BF: We're seeing that too. Games developed in Korea being targeted towards North America and being hugely successful, which has made us look critically at our business models.

BC: Can we weigh the benefits of supporting spreadable content against the potential for lost revenue? should we be looking at longer-term benefits?

MM: In the entertainment industry, everyone is good at looking at what they're losing. During the two days we've had here, there are many examples of making investments on IP to nourish and develop it that have paid off.

NB: There's an assumed dichotomy behind that question. It's only a dichotomy if the content is the only type of revenue, and if the audience size is static. If you're expanding your audience and there's more ways to make money off of it than just selling the content, then the two are really working together.

BF: For a while in our industry, it was 99% boxed products, and what we've seen over the past few years our industry could do another 15-20% of our business digitally. This doesn't really cannibalize our retail business, which is actually also upgrading--Walmart selling digital music for 99cents. They're selling things for the same price as the box product and figuring out that sometimes the audience is just not physically entering your store.

NB: One of the things that the Swedes really talk about is that money is great and you need it, but isn't it more important that there's a world full of great music? Throughout this whole conference we've been really focused on money, but these industries have not been around forever and music used to be free and be about people hanging out with each other. So there's also an idealistic argument to be made for the cultural value of these things that are being produced and distributed.

Grant: Can you build a revenue capture model that lets me send a penny to the creator of an mp3? I don't hear any evidence that people are building a system like that.

NB: In Last.FM, every time someone streams a song of yours, the artist gets a tiny royalty payment. There are also patronage albums where before a musician makes a record, they go to their fanbase (it was like public broadcasting: different levels of suport) and one band raised 90,000 dollars in less than a week.

MM: This is an amazing model.

XL: Finally, we can spot some fans on this side of the table!

BC: Games are different than int'l distro of other media because they have ongoing support and ongoing transactions somewhere in the mix. how does a US company deal with TOS issues in Delhi and micropayments from Hong Kong?

BF: We have international partners who deal with the game in those countries that police the ToS in those countries. If it's a US based game, they have to adhere to our terms of service. And it is culturally sensitive: there are different gameplay styles in different countries and game moderators may not know that, so that's why we try to localize everything as much as we can.

XL: Is there any type of cultural scaffolding available in your games where a player going to a foreign server gets a cheatsheet about the different practices? To encourage global experiences rather than staying in their localized versions?

BF: Not currently officially, but there are forums and other players that help and tutorials (if you understand the language). But it can be a little challenging.

Question from the crowd: Can you discuss how the Swedish companies are keeping the lights on?

NB: First of all, they're not looking to get rich--they're happy if they can pay rent and buy groceries. Licensing is helpful for a lot of people. Live music is really big. Some of these people are working other jobs as well--sometimes as a result of the good work they're doing with the spreadable media. Not what people want to hear, but it's good for the content.

BC: Speaking of transmedia, why isn't online transmedia content exported together with TV series? Heroes and Lost are aired in brazil dubbed in Portuguese but all the online content is not.

MM: Transmedia is a nice thing, but it's bad when the importers don't understand because the exporters DO understand. People are still thinking analog when they're selling and buying properties.

Question from the crowd: Obviously, technology costs are coming down and distributive language translation etc. is getting easier. Are we going to see cultural and legal issues to become the only remaining issues that hold the global deals from happening?

MM: Great question, but I think the most important factor is having great stories. It's about empathy. Even with technology barriers and governmental barriers, you just have to understand the country you're trying to reach, which is a little deeper than going to Wikipedia (anecdote about people developing million-dollar ad campaigns based on Wikipedia). Televisions are in 98% of homes, but we only have 40 million online and most of them are on dialup. But even with those numbers, we have been #1 in internet usage in the whole world.

BC: Is ad-supported media/gaming a workable business model across cultures? If not, why not?

BF: Most communities in North America will support ads, but it depends on the ads. Sometimes you can pay to get rid of the ads.

MM: I think that's going back to broadcast--that's not any different from having P&G ads during commercial breaks in soap operas. We have to think differently; we have to think about brand utility. We need to figure out how our brands can become more useful. The consumers don't want billboards anymore. We fight every day with clients, telling them we're not going to do that because we have to do better. We are developing a project for short films (finding talents), where the characters don't even necessarily have to use Axe, for Axe.

BF: We see value and the advertisers see a lot of value. Advertisers are seeing their markets disappearing. Girls&boys don't watch as much TV as they used to.

NB: There's also now more legislation about how much advertisement can appear and where.

Question: Could you talk more about anti-addiction measures? And also, I want to hear about the positive effects of gaming?

BF: Anti-addiction measures include warnings in game that tell them they've been playing too long and then kick them off the game to allow them to eat and sleep. Good things out of gaming? A lot of socializing happening online which is having positive effects in real life too. And there are games like Guitar Hero that are making video gaming more social too.

MM: Some schools in Brazil saw how excited kids were in arcades and kept them farther from the schools but also put the games in the schools to motivate kids. Two years ago there was a guy named DooDooMagic who was the best Gunbound player in the world and was physically kidnapped by a cybergang so that they could steal his ID and sell it. But that's not about online gaming--it can happen to poker too.

NB: I'm raising a couple of geeks right now, and games are the currency that they exchange in their friendships. I don't know what my kids would do without Spore because that's where they bond with each other. there's a lot of family and peer interaction that happens around gaming.

Question: We talked a lot about internet and TV as media platforms, but what about mobile?

MM: In Brazil, we just closed 145 million mobile phones. Much more than computers and televisions. So mobiles are definitely happening in Brazil--not waiting until 2009. People are already doing amazing things with music in Brazil. The SMS market grows 48% every month because everyone is using it to spread something.

BF: NA is trailing everyone else in terms of mobile, but it's catching on here. Teens/Tweens/even parents are using it more and more often. All industries are looking at this right now and trying to figure out how to leverage it.

From the audience: All the types of media we've been talking about can spread around the world without barriers, but mobile is a closed loop system--it's local, not just country by country but also carrier by carrier. It'll be interesting if this ever gets solved: maybe the mobile web? But it's a huge huge problem. One of the major shifts is that we should stop thinking of the mobile phone as a little computer and more as a little TV.

Question: Considering the new economic scenario wouldn't be a smart idea for game, music, or film industry to reevaluate the IP thinking?

NB: There was a Twitter comment by Kevin Driscoll asking about hiphop and sampling and how that works with music blogs. I think there's a very strong argument to be made to reform current IP thinking to broaden fair use.

MM: The IP question is really out of my league. We have an amazing sampling bank with spreadable media. We can't just cut IP and switch entirely to Creative Commons, but...it's a tough issue.

BF: With my business hat on, if the artists don't get paid for what they're putting their blood and sweat into, why would they create it?

NB: The economics of gaming is very different from music--it takes way more capital to create a game than to make music. But there was an April Fools joke by one of the labels that said that the economic incentive for making music was gone so they were going to stop. It was a joke because there are people who make music because they want to make money, but they suck. Good music comes from people who HAVE to make music when they get up in the morning.

MM: We have this enormous gap in how to find talent. There was an article in Brazil that says that all the great Brazilians are dying--for real Brazilian music. We need perennial talent development when we're talking about IP.

NB: Sweden has grants for getting artists equipment or getting their CDs out.

Question: I think it's idealistic to think that music should be free again, because there are millions of people involved in the music industry that aren't musicians.

NB: The industry is shifting, that's a fact. I mean, there probably used to be a thriving chariot industry. But when the product you're making doesn't quite fit the times anymore, there's a necessary change. Do you stifle business innovation by protecting models that don't work anymore? I don't deny that it's painful and that people will lose their jobs, but this is happening anyway. So do you say, we can sue those people? Or do you move on?

Question: I wanted to end the the panel on a positive note. Where do we see positive innovative models of sharing? Like technobraga, where they throw these elaborate parties with spaceships and lasers but before the come to your town, they hand out CDs to everyone so that everyone knows the songs. They're not trying to make money off of it. So what else?

MM: I have a story of a model that's about 300 years old. I was watching Shakespeare in Love. Do you know where the expression "merde" comes from? it means shit, but it is good luck in theaters. People say that because as you have more shit in front of the theater, it is because a lot of people are going to the theater. So merde means I hope everyone comes with their horses and there'll be a lot of shit in front of the theater. Calypso isn't Radiohead, but they're successful. We have to speak about global flows. In places like Brazil, there's a big income issue, we have great opportunities for content creators to sit with brands and make amazing things. The example we brought from Nokia, it's happening.